Islandsbanki hf

ICEX:ISB

Earnings Call Transcript 2021-Q4

[Birna Einarsdottir, CEO & Member of Executive Board]

Good morning, and welcome to this webcast presentation of Islandsbanki full year and fourth quarter presentation result. I'm Birna Einarsdottir. I'm the CEO of Islandsbanki. And with me here to present today is Jon Guoni Omarsson, the CFO. He is actually not with me here in at the bank today, he is at home. He has COVID, but he is in a very good health. We did publish our result yesterday. But in a way, we can say it was no surprises there because we gave out a profit warning in January.We are very happy with the result and I'm looking forward to take you through the highlights. And then, when I have finished, Jon Guoni will take you through the details regarding the financials.Following, we will have a Q&A session. You are able to participate via the conference call using the dial-in details and the operator will give you the floor. You can also submit questions in writing using the webcast form.But moving over to the key takeaways. We are presenting here today a very strong result for the last quarter of 2021, with over 14% return on equity, resulting in over 12% return on equity for the full year, which is well above our target.On the income side, we saw a very strong growth in the fee and commission income of 28% between Q4 2020 and '21 and 22% when we look at the full year. The growth is coming from investment banking, the card -- our card business and asset management mainly. Our interest income did also develop well in the year 2021, and we saw growth there by 5%.We are very happy with the results that we saw on the cost side. And our cost reduction effort resulted in a reduction of 9.4% in the real term. The positive impairment of course is a important factor of the good result of the year 2021. We have seen a positive rebound in our tourist industry. And now we can say that 60% of our forbearance loans have resumed payment already.We have only released ISK 1.8 billion of the ISK 6 billion that we put aside last year because of COVID. So we might be able to see a positive impairment this year if our tourist industry continues to improve. We can say that all our business units did perform well last year. And in a way, we can say that everything did work in our favor. Even though we had election, earthquakes and COVID, it was a pretty good year.Personal Banking with over 20% growth in the mortgage book. Now we see over 75% of new account opening in the retail bank being done online. Islandsbanki is the largest SME bank in Iceland, with over 40% market share, for example here in the capital area.Our business banking with a very strong return on equity and the deposit position has never been stronger. We also saw a record year for our corporate and investment banking. We played a big role in refinancing our clients through lending and bond issuing. And our fund management business also had a record year with a 17% increase in assets under management.Operationally, we finished implementing the loan system, and that was the last one of the core system to be replaced, replacing many legacy loan system that we have been using for decades. We did open a software development center in Poland to attract IT talent, and we did finish off our back office optimization. So many good milestones in the year 2021.But moving over to the Icelandic economy. I have mentioned before that we are seeing strong rebound in our tourist industry. And many of our clients in that industry are telling us that they are seeing stronger booking now this year than they saw in the year 2019.Our chief economist is confident that the forecast of 4.7% GDP growth will be reached this year with the export industry as the main driver. The government gross debt of -- as a percent of the GDP remains at a sustainable level despite a very strong support that the government gave to the businesses during COVID.Like in most of the countries, the inflation has proven more persistent than hoped and looks likely to remain above the Central Bank target of 2.5% for a while. The worsening near-term inflation outlook and the growing sign of economic recovery has prompted the Central Bank to hike interest rate faster than was expected with 75 points increase earlier this week for example, with the Central Bank rate now 2.75%, getting close to what it was before COVID.But now briefly about our targets. Our previous return on equity target was 8% to 10% and long term over 10%. Our revised target is above 10%. We have also revised our cost income ratio to less than 45% to be reached this year instead of 2023. Revised cat 1 capital ratio target is now 16.5%.We are very much focusing on our return on equity bridge that we did present during the investor meetings before the listing. And all projects related to that are on target.Our growth target -- to reach this 10% return on equity, our growth target is the same, to grow in line with the GDP growth through the business cycle. But at the same time, we are keeping the cost flat until 2024. Therefore, we are lowering the cost by the inflation level. This is something that we have delivered in the past, and we have controlled -- fully control over.We will propose to pay ISK 12 billion in dividend in our annual meeting in March. And after that, we will have ISK 40 billion in excess capital. And we are looking -- we are also planning to propose to buy back 15 billion of own shares -- our own shares in the coming months.We remain very focused on our strategy delivery. We are now 5 years into our 5-year -- we are now 3 years into our 5-year strategy focus. This year, we will continue to increase efficiency as you see in the left side of the house. But at the same time, we are enhancing our service and sales by data, our data powerhouse, and we are creating a SME ecosystem, working with fin-tech companies to reach that target.We have a very strong progress in our sustainability journey this last year and the net 0 target in 2040 something that we are of course working on every day. On the sustainability journey, we had a very good result. We did reduce our footprint of our own operation by 20% last year, good progress with our suppliers. But our main challenge of course will be the footprint from our loan book and investments. And that is now accounts for over 340x that our own operation is the footprint from our own operation.So that is of course our big challenge. But as you see from the next slide, there is a good balance -- there's a good balance in our sustainability funding and our sustainable lending portfolio. And that is, for example, the double last year. In January, we did issue EUR 300 million sustainable bond, and we aim to use that this year for green, red and blue sustainable lending.But now over to Jon Guoni with more details about the financial, and I hope the technology will support us in this.Over to you, Jon Guoni.

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Thank you very much, Birna. And well, I know that I am a COVID positive person, but being tested twice positive for COVID, this may be taking it a bit too far. Fortunately, I had very mild symptoms in both cases and good to have this over and done with.As Birna said, we are extremely happy with the results, and they are exceeding our expectations on all fronts. You can see here on the -- when we have a bridge for both the year as a whole and the quarter that we have seen good progress on all fronts.The only yellow boxes are obviously taxes due to higher profits. And if you look at the full year results, it's the operating expenses. But there we have to take into account that we had IPO-related costs of around ISK 660 million. So if we take that out of the picture, we are actually down between years in terms of the costs and as Birna mentioned earlier, a fairly sizable real reduction in the cost base.If we move to the next slide, the net interest income. We had good progress there, over 4% growth. And the main drivers is the volume, both the deposit side and the lending volume. We are now however seeing in terms of the margins, the opposite impact from what we saw when the rates went down. So now rates are moving upwards quite steadily. And therefore, we are seeing a bit of a reduction in lending margins, but an increase in the deposit margins.And we do expect to see this trend continuing in the next few quarters. And for our foreign viewers, it's obviously notable that yesterday, we had a 75 basis points rate increase from the Central Bank.Moving to the next slide, the fee income. There, we have basically outperformed our expectations on all fronts. And especially, we are now seeing in the fourth quarter that the cards and payment processing is picking up, both with tourists come to Iceland and maybe more importantly, Icelanders traveling much more abroad. So we are quite happy to see that.The investment bank continues to perform very well and having a splendid year throughout. And as Birna mentioned, asset management has been extremely strong as well. Our fund management business, Islandssjodir, they saw a 46% increase year-on-year in terms of their net fee and commission income, slightly dip there in the fourth quarter in terms of loans and guarantees, but good growth for the year as a whole.Then moving to the next slide, in terms of the financial income. Markets were quite supportive last year, and that's not something that we rely on every year going forward. And that's one reason for our guidance in terms of the earnings of 8% to 10%.We are obviously quite conservative or have a conservative approach in terms of our guidance. But we are not relying on stat the positive financial income in our results. At the bottom left, you can see the sources. The shares and equity market obviously was extremely strong in Iceland. And but for example, now we're seeing a drop in January as in most other countries.And then we have some fluctuations in the -- both the derivatives and the mark-to-market in terms of funding. So that's something that cannot go up and down depending on the yield curves, how they are moving. But overall, a net positive impact from financial income in 2021. And then on the bottom right, you can see our discontinued operations. There, we had a very nice pickup or you could say, almost a lottery price at the end of the year in the fourth quarter. This is obviously something that comes not in every quarter, but once in a while.And in this case, we had been resolving one of our subsidiaries, which had shares in the Visa, the Visa C shares so-called and some positive impact from that. And also we were selling a plot of land that we have been developing for quite a few years. And so both of these items came in the fourth quarter and giving us quite a big boost in that quarter in terms of the earnings. And as I said before, that's not something that we rely on, want to give expectations in terms of earnings going forward.Now moving to the cost side on the next slide. As Birna mentioned and I have mentioned earlier as well, we are extremely happy with the development there, 9.4% yield reduction year-on-year, obviously, in Iceland, where inflation is running at around 6%.You can see that on all fronts, basically, we are making good progress and the cost-income ratio is coming down quite steadily. And at the bottom, you can see also see that the FTEs, we saw quite a big drop in the fourth quarter. And we continue on this trend basically and obviously seeking ways to increase efficiencies across the board.And as we have talked about before, every manager of the bank has a very clear mandate to find ways to increase efficiencies going forward. So a very good picture on the cost base across the board.Then moving to the next slide. The impairments is obviously having a very drastic impact and especially when comparing 2021 to the year before. You can see on the top left how the impairments have been coming through and positive figures here obviously means a negative impact on the results was positive impairments meaning that we are impairing against the loan book. But then, in 2021, we have negative impairments, so meaning a positive impact on our P&L.The gray box or the gray part of the bar, you can see is the impact from COVID, the direct impact. And there, we have realized some of the impairments that we did in 2020. We have taken those back as the economy has recovered and the tourism industry has done a bit better than we had feared. We are obviously not through the woods yet. There's quite a bit of uncertainty still in terms of that sector and how quickly things pick up. But we are hearing very positive signs or seeing signs from our borrowers that they are seeing very strong interest for the summer here in Iceland.We can also note that we have as a percentage of the loan book quite a bit higher impairment account than the other banks here in Iceland meaning that we have been more conservative in terms of realizing -- reimbursing the impairments that we did in 2020. And this means that we have hopefully, that if things go extremely well, a bit more upside in terms of having extra releases with impairments.But that's not something that we rely on. And therefore, in the guidance, we have said that we have a guidance of 8% to 10% ROE this year. And if impairments are in line with what we maybe can expect through the business cycle of 30 basis points, then we can expect to be rather close to the bottom of that range. But at the same time, if we have obviously a very good development here in Iceland and negative impairments, so meaning a release of impairments that can have obviously quite a drastic impact on our return on equity.Then, moving to the -- or maybe continue here, sorry, go back a little bit in terms of the customers. As Birna mentioned before, about 60% of our customers that have come into forbearance have already started repaying. And we can see on the top right that Stage 2 loans have come down very steadily mainly due to basically that they are starting to repay and in many cases have fully repaid their loans. At the bottom right, you can see how we categorized our cost of tourism into these 4 groups where in the beginning, we are quite pessimistic about quite a large part of the industry.But as you can see on the far right column, we are now seeing most of the borrowers being group #1 or 2, so with rather limited overall long-term impact from the pandemic. But as I said before, there are still some risks there, and we will see how the summer and the next 12 months go on that front, but we are quite optimistic.The next page. Here, we can see in terms of the loan book, the growth overall. We are quite happy with the growth. And as you can see from the bars, the yellow bars, where we're seeing the growth, which is mortgages. There's a very big growth there last year and a strong momentum in the housing markets here in Iceland. At the same time, we saw a modest growth in terms of business lending, and there may be 2 reasons.Firstly, that businesses have just not started to invest heavily as a result from the pandemic. So people were -- wanted to see obviously things come out of the pandemic and the economy starting to pick up, so not heavy investment level.At the same time, we were also supporting many of our clients to fund themselves even more favorably through the bond markets. And so therefore, we had a more increase in our corporate banking in the first half of the year, but quite a few of our customers used the bond markets in second half. And therefore, we had a net almost a flat year in terms of the lending book. So that means that we are using good -- using our balance sheet very well and supporting our clients, but at the same time helping them to optimize their financing and through the bond markets.LTV distribution at a similar level as it has been, and we are very happy in terms of our loan book and feel that we are quite conservative in terms of our lending practices and with a good diversification between industries.Moving to the next one. Here's a bit more on the COVID moratoria. And on the left side, we can see the performing loans with forbearance and how that's been developing. And as I've noted before, you can see on the right side that we have seen more than -- or about 60% of our private borrowers already starting repayments. And the rest will -- and most of the rest will start in the first quarter of this year. And so the outlook there is quite favorable.Moving to the next one. Deposits obviously remained our largest funding source, and we saw a very good development last year. We saw a very strong increase in retail deposits, which is obviously the most stable part with the deposit base. But actually a reduction in maybe the most volatile part of the base as you can see on the bottom right, basically due to the fact that we were not -- or didn't need that much funding in terms of the most expensive deposits, which is obviously very helpful and seeing the deposits on the retail sides growing very much in line with the growth in the loan book. So we are quite happy on that front.And then moving on to the next slide, on the funding. We've basically had made good progress now in terms of the sustainable bonds and issued just recently in January, our second international sustainable bond of EUR 300 million, which was very well-received. And that -- we used that to refinance part -- refinanced basically our biggest maturity this year. So in the middle here, you can see the maturity profile. And we have already refinanced the biggest part of the 2021 financing. So we don't expect to see much volume in terms of issuance throughout this year.We do have however have some Tier 2 coming up for prepayments in the fall. And obviously, we'll be looking to the appropriate timing to access the market to do refinance those.Then moving to the next one. In terms of the capital, that's -- obviously the capital position remains extremely strong and well above the regulatory requirements and our own targets. And you can see here our long-term target is 16.5% CET1, and we have excess capital of around ISK 40 billion after having paid the annual dividends this year.You can see on the right side, as Birna mentioned before ISK 11.9 billion, or almost ISK 12 billion in terms of ordinary dividends, which is 50% of our earnings in 2021. And after having paid that, we still have about ISK 40 billion of excess capital. We are, as I said before, rather conservative. So we plan to release ISK 15 billion of the ISK 40 billion in the coming few months and plan to do that through a buyback of our own shares.We also could have provided guidance, but an overall optimization of the capital structure we plan to do that in the next 12 to 24 months. So the ISK 15 billion buyback is obviously the first step towards that target. We also note here that there are 3 buyback options. And we are noting that especially here because in Iceland, it's only the first one that has been common here with the share buyback programs.But [indiscernible] note, so investors are not surprised if we use the other 2 opportunities or a combination of the 3 options. And you can see here that the first one is the share buyback program, which is a standard measure, where we have a broker actually buying shares in the market. The second potential is a tender offer, where the bank basically goes at the end of a business day and offers to buy a certain amount of shares.And our shareholders then can take advantage of that if they choose to do so. And the third one is to take part in a block sale. So if one of our shareholders is selling a block share, the bank can take part in that. And there's a recent example of that when Nordea bought back some of their shares when Sampo was reducing their shareholding in Nordea.So we have these 3 options in terms of the buybacks. And we will basically be assessing the markets and either choosing one of these or having a combination. And I would expect at least that we look over to the next couple of years that we will have a combination of these 3 options. So exciting time to have had in terms of the capital release and we obviously remained very strong in terms of our capital position.So then I have gone through the slides on the financials. And I hope we have some questions from the audience. Thank you.

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. Thank you, Jon Guoni. As I mentioned, we have a time for Q&A session now. And you are supporting me with the questions that will come in writing. And the operator is going to give the floor to people that would like to ask the questions themselves. Anyone that has...

[Operator]

And for now, we've received 2 questions via the telephone lines. The first one is from Sofie Peterzens, JPMorgan.

[Sofie Caroline Elisabet Peterzens, Analyst]

Here is Sofie from JPMorgan. My first question would be on interest rates and the [ DBD ]. Could you just remind us of your rate sensitivity, because the rates have gone up quite substantially in Iceland, but NII was a little bit weak in the fourth quarter. Is there kind of a lag effect and how should we think about the recent plus 75 basis point rate hike that we saw earlier this month in Iceland? So if you could just comment around that.And then my second question would be on the share buyback and the block sale participation. Could you just remind us kind of how much the government still owns in Islandsbanki and what the time frame that they kind of have said and based, can you just elaborate maybe a little bit more on kind of a directed share buyback and how that really works in Islandsbanki? Apart from the Central Bank approval, do you need any other approvals to do that directly share buybacks on the -- for the initiative from the government?

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. If I start with the second one and then I will give over to Jon Guoni. The government now -- during the listing in the spring, the government itself 35% of their shares. So they still have 65% of the shares in Islandsbanki. When the government did present the budget end of last year, they did announce that they were planning to sell the rest for the next 2 years. The exact timing has not been decided. Of course, it depends on the market circumstances. Yes, and then Jon Guoni, if you go into more details about the block sale and the interest rate.

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Yes. So firstly in terms of the approvals needed. It's -- obviously, we have to get approval from our shareholder meeting which was part taken in March and I think it's 19th of March and then also from the Central Bank. But having had that, then we can basically choose the right moment after that. And when we will do it before our Q1 results or shortly thereafter, that's something that we need to assess. But no other approvals are needed.

[Birna Einarsdottir, CEO & Member of Executive Board]

Talking about the buyback in any form. Yes.

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Yes. And [indiscernible].

[Birna Einarsdottir, CEO & Member of Executive Board]

But maybe sorry for the government, if you're thinking what need to do -- the government need to do to continue with their sale, they need to take it through parliamentary committee, but it is relatively smooth process for them.

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Exactly. Well, that's a process that's ongoing now for them, for the ISFI who host the shares to get the full mandate to be able to sell a further stake. In terms of the block sale, maybe not too much more to say about that. I mean that's like I said, we have a recent example where Sampo was selling a fairly big sale in Nordea. And then Nordea took a part in that sale. I think they probably 10% -- 10% or 20% of the offering. So that's at least one option that we have.But like I said, I mean, we will not get our approval until the 19th of March the earliest. So if there's a sale before that from the government, we obviously cannot partake, but possibly later in the year. And so we will basically just keep our options open in terms of these 3 possibilities.In terms of the rate sensitivities, we can note that our liquidity book is around ISK 150 billion-ish. And therefore, a 100 basis point increase in rates feeds through our -- about 60 basis points in terms of return on equity. So it obviously has a good impact there. But it takes some time because part of the liquidity book is obviously in fixed-rate securities, maybe 1 up to 3 years. And therefore, it doesn't feed through immediately, but comes over time.So a positive impact that comes in more and more. And that obviously the 75 basis points will have a good impact there. In the fourth quarter, we had a good impact from the rate increases. But at the same time, we had some negative impact as well, and therefore, a bit below consensus on the net interest income.Firstly, it was the issuance obviously of Tier 1 paper in September that had an impact there, a lower CPI imbalance. And so the CPI imbalance has basically disappeared. And -- but we had a fairly good profit on that in the year before. And then there are some other items in terms of the management of liquidity and then other things and within treasury, but we are seeing a good performance in all the business units.So hope that gives you a fairly good idea. It's a bit difficult to give the exact timing of the -- how quickly the interest rates go through, because like I said, it takes a bit of time, because some of the securities are fixed income. But overall, it will come through, especially if we look into the next 1 or 2 years, then we should foresee the full impact of the rate increases.

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. Are you okay with that answer?

[Sofie Caroline Elisabet Peterzens, Analyst]

That's helpful. Yes, that's very helpful.

[Birna Einarsdottir, CEO & Member of Executive Board]

Thank you. And there was someone else with questions?

[Operator]

Yes. We have 2 more questions at this time. The next one is from Namita Samtani, Barclays.

[Namita Samtani, Research Analyst]

I've got 2 questions, please. Actually, given the rate hikes in Iceland, how are you seeing the competitive landscape in the mortgage market now, especially versus the pension funds? And in general, could you talk about mortgage volumes and what you expect to see there?And then, secondly, just a bigger picture question. But in terms of revenue trends in 2022, could you just talk about some of the big moving parts?

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. The mortgage market and the -- how the rate is impacting that. We have seen, for example, in January, it was -- continued to be a very strong market for mortgages, stronger than I have to admit than I expected. I can see that there will be less, of course, refinancing because that is what we have been seeing during the rate when the rates were going down, that our customers were refinancing and also they were refinancing with us that previously from the pension funds. We will see less of that. We have a very strong market share among the first buyers.And I can see that will continue, although the property prices have been rising like everywhere else. So it's more difficult for the first buyers to get into the market. So that is some -- there's some discussion about the markets -- market in Iceland. Jon Guoni, would you like to add something to that?

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Yes, basically the Central Bank is obviously increasing rates and therefore trying to cool down the property market. We had close to 20% increase in real estate values last year as we have seen in many other countries. And so part of the reason for them to increase the rates is to maybe cool down that market a bit. At the same time, there's a shortage of properties, and that's having an impact also on the prices that we haven't seen enough new built over the past few years.There are many projects now ongoing, but it will take time obviously for them to come into the market. So that's having an impact. But -- so we do expect to see more of a stabilization in that market in terms of the mortgages and sales this year, so less growth I would expect than last year.In terms of revenue trends, we are quite optimistic and -- but we obviously saw extremely strong growth last year. So we are now building from a very strong or high base you could say. So our guidance going forward is more or less that we will grow in line with normal GDP through the business cycle, difficult obviously to say for each year. And that for example, it depends a bit on the capital markets. They are very, very weak at the moment, but can obviously recover later in the year.The pipeline however is quite strong in terms of the capital markets. And we are hoping to see as I mentioned before, a pickup in the payment-related fees with regards to tourism. So overall, a fairly good picture, and that we would see hopefully revenue on the long-term trend in terms of the rising with normal GDP.Maybe note there that the GDP, we -- our chief economist and the Central Bank is now forecasting that GDP will grow in the range of 4% to 5% in real terms this year and then obviously some inflation on top of that. So with the inflation, if inflation runs at 5%, then the nominal GDP growth is 10%. And I think it's actually would be quite challenging to see revenue grow quite that strong of a pace. But overall, the outlook is fairly good.

[Birna Einarsdottir, CEO & Member of Executive Board]

I'm very optimistic about the revenue development for this year. Next question?

[Operator]

And the next question is from Piers -- yes, it is from Piers Brown, HSBC.

[Piers Brown, Banks Analyst]

Yes. I've got -- actually, it's probably 3 questions, 2 are on the buyback and one on the cost of risk. On the buyback, should we think of this as a one-off program? Or will you look to continue with a rolling program in view of the capital surplus?And then I'm just interested in terms of the thinking why you've gone for a buyback rather than a -- say a special dividend, particularly in the context of some of the liquidity limitations with your share currently? So if you could just maybe address that.And then, secondly, on the cost of risk. So the 8% to 10% return on equity guidance for this year, you've mentioned that the normalization of cost of risk could see that number be at the lower end of this range. I mean how realistic do you think it is to get to a full normalization of cost of risk this year in the context that you're still carrying the ISK 2 billion overlay for -- on the COVID loan exposures?

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. Jon Guoni, would you like to start with the buyback program? But of course, as we mentioned in our presentation that we will after the dividend payment this year, we will have ISK 40 billion as a excess capital, and we are planning to propose only ISK 15 billion buyback this year. Of course, we are going to see how that goes before we continue with that kind of -- how we continue with reducing the capital ratio. So Jon Guoni, would you like to...

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Yes, certainly. And as I said before, the ISK 15 billion, that's basically the first step. We have noted that we plan in the next 12 to 24 months to optimize our capital structure. And so the ISK 15 billion buyback is basically the first step towards that. So it's not a one-off exercise.In terms of buyback versus dividend, that's something that we looked into very thoroughly and have spoken to many investors also to hear their views. And we hear that a combination of dividends and buybacks is preferred. And we think that that suits the bank as well, having a rather stable dividends and then being able to use the buybacks to meet both fluctuations in capital and to optimize the capital structure.So we think that a combination of the 2 is very suitable going forward. In terms of the cost of risk, as we have noted before, we have a fairly conservative view there. And so in terms of the guidance, we note that if cost of risk is 30 basis points that we would be at more the bottom of the 8% to 10% range. But at the same time, we note that we have about ISK 3 billion of still impairments from COVID. And so if everything goes extremely well, we could potentially see a release of those impairments.But at the same time, we have to note that the impairments and the IFRS-9 accounting treatment means that we are always forward-looking, even though things go well this year, we could have something happen in December, which means that we'll have to impair against future losses from that event. So giving a guidance for that is quite challenging. But we hope by saying this that gives you as good of a picture as we can give at the moment.

[Birna Einarsdottir, CEO & Member of Executive Board]

I hope that answer your question. I think Jon Guoni has now said conservative 20x during this presentation. So I think that is our message.

[Piers Brown, Banks Analyst]

Yes, message received.

[Birna Einarsdottir, CEO & Member of Executive Board]

Thank you. Do we have any more questions?

[Operator]

No further questions.

[Birna Einarsdottir, CEO & Member of Executive Board]

No more questions. Any written questions? Johann Wathne was going to read for us the questions, are very disappointed there are no written questions. Okay.

[Johann Wathne]

We have a question. So a question from the audience. Regarding the share buyback options being considered, why would you need to -- why would you need the option of block sale participation in addition to tender offer where every shareholder can submit the best offers?

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. Is that the question?

[Johann Wathne]

Yes.

[Birna Einarsdottir, CEO & Member of Executive Board]

Yes. As Jon Guoni mentioned, we haven't decided on those 3 different ways forward in this. But Jon Guoni, any more if you would like to add to this?

[Jón Guðni Ómarsson, CFO & Member of Executive Board]

Yes. So I mean, the reason for having that option is that, in our case, we have one large shareholder which can have a block sale for other -- and for them obviously having a very large stake of 65%. That's not something you can offload in the market easily. For other shareholders, they can sell stakes in the market fairly easily in terms of their holdings.So that's the reason why block sales are used. And as Birna mentioned, we are just keeping our options open. And -- but we will obviously make sure that we have a good balance in terms of the -- observing the benefits of all shareholders.

[Birna Einarsdottir, CEO & Member of Executive Board]

Okay. Any more written questions? Okay. Then I think we are coming to the end of this presentation. Thank you all very much for participating. We are very happy with this result and proud of where we are today. Thank you.